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About Federal Flood Insurance

Over $11.6 billion in flood damage covered since 1978


Since 1978, the federal flood insurance program has paid out over $11.6 billion in claims. Up to 25 percent of that went to owners of flood damaged property located outside of designated "flood prone" areas. Read on for the basics of the federal flood insurance program.

About the National Flood Insurance Program

Congress created the National Flood Insurance Program (NFIP) in 1968 as the government's response to the rising cost of taxpayer funded disaster relief for flood victims and the increasing amount of damage caused by floods. The Federal Emergency Management Agency (FEMA) manages the NFIP and oversees the floodplain management and mapping components of the program.

Also See:Flood Insurance Myths and Facts

Within participating communities, FEMA is responsible for determining the extent to which flooding might threaten any given area of land. Flooding threat classifications run from minimal to severe, in the case of areas located in "Special Flood Hazard Areas" (SFHA's).

Over 20,000 communities across the United States and its territories participate in the NFIP by adopting and enforcing floodplain management ordinances to reduce future flood damage. In exchange, the NFIP makes Federally backed flood insurance available to homeowners, renters, and business owners in these communities.

Flood damage is reduced by nearly $1 billion a year through partnerships with communities, the insurance industry, and the lending industry. Further, buildings constructed in compliance with NFIP building standards suffer approximately 80 percent less damage annually than those not built in compliance. And, every $3 paid in flood insurance claims saves $1 in disaster assistance payments.

Flood insurance claims and all operating expenses of the program are paid for through premiums. None of these costs are paid by taxpayers.

Is Flood Insurance Required by Law?

In order to get secured financing to buy, build, or improve structures located in Special Flood Hazard Areas (SFHA's) you will be required to purchase flood insurance. Federally regulated lenders are required by law to determine if the structure is located in a SFHA and must provide the buyer with written notice that flood insurance will be required. In other words, for properties located in Special Flood Hazard Areas, no flood insurance, no loan.

Structures located in SFHAs have a 26 percent chance of being flooded over the course of a 30-year mortgage. Conversely, the likelihood that a building will catch fire over the same 30-year period is about 4 percent. Consequently, a borrower seeking a mortgage on a structure in a SFHA is more likely to experience a flood at that structure than a fire over the life of a 30-year mortgage.

About SFHA's and the "100-year Floodplain"

The SFHA is also known as the 100-year floodplain. It is more precisely defined as the floodplain associated with a flood that has a 1-percent annual chance of being equaled or exceeded in any given year. Therefore the SFHA is not a flood that happens once in a hundred years, rather, it is a flood that has a one percent chance of occurring every year. Thus, the 100-year flood could occur more than once in a relatively short period of time.

What About Property NOT in an SFHA?

Should you buy flood insurance on property not located in a Special Flood Hazard Area? FEMA recommends it.

According to FEMA, all areas are susceptible to flooding, although to varying degrees, in fact, 25% of all flood claims occur in the low-to-moderate risk areas. Flooding can be caused by heavy rains, melting snow, by inadequate storm water drainage systems, failed protective devices such as levees and dams, as well as by tropical storms and hurricanes.

Whether your property is located in a Special Flood Hazard Area or not, flood insurance is available to any property owner located in any of the over 20,000 communities participating in the NFIP.

Handy Flood Program Links

Flood Insurance Q&A

Standard Flood Insurance Policies

How to Find Flood Zone Maps

Flood Insurance Library

Flood Insurance Forms

Flood Insurance Laws & Regulations

FEMA's Flood Mitigation Division
FEMA's Mitigation Division manages the National Flood Insurance Program. It has of a number of programs and activities of which provide citizens Protection, with flood insurance; Prevention, with mitigation measures and Partnerships, with communities throughout the country.

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